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In: Accounting

X Company currently buys 7,000 units of a part each year from a supplier for $8.30...

X Company currently buys 7,000 units of a part each year from a supplier for $8.30 per part, but it is considering making the part instead. In order to make the part, X Company will have to buy equipment that will cost $150,000. The equipment will last for 6 years, at which time it will have zero disposal value. X Company estimates that it will cost $29,485 a year to make all 7,000 units.

What is the approximate rate of return if X Company makes the part instead of buying it from the supplier? [Note: 0.03 means 3%, etc.]

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ekkarill92 answered 1 year ago
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